Why is the ECB doing nothing to stop the euro’s ‘claim’?

A brief look at the exchange rate charts is enough to start worrying about what is going on with the euro, but also with those designated to protect and manage it. That is, the ECB first, but also the Commission second. The reason for concern is not simply the slippage – so we used to call it the devaluation – of the euro’s exchange rate with the dollar that tends rapidly to the $1.02 and money market analysts not to rule out 1 to 1 on the visible horizon. Besides, the “cheap” Euro could be an advantage in other circumstances, i.e. if the eurozone had not begun to sink into the industrial crisis of processing and did not face the upcoming tariff storm from Trump and the export “attack” of cheap China. The reason for concern is with two other issues of crucial importance for a currency that aspires to be the second strongest on the planet. It is first and foremost about how many people use this currency for their transactions, beyond the euro area and EU residents. And they are less and less. Very, very few. And this is in circumstances where both trade and geopolitical conflicts move in a more unfavourable direction for Europe and the euro area. The following diagram even reveals that this is the case with the dollar covering more and more space than the euro withdraws. In fact, the euro is not withdrawn, but those who have so far used it are withdrawn, losing their confidence in its use and avoiding the “loss” that accompanies its use due to its devaluation of the dollar. The figures in the chart clearly show that the abrupt withdrawal of the euro’s ‘users’ and their relative movement in the use of the dollar coincides with the beginning and then expansion of the war in Ukraine and the Middle East. Two wars, especially the war in Ukraine, which forced the eurozone to slip into an increasingly economic slowdown due to the energy crisis and the huge increase in its export production costs, both vis-à-vis China and especially against the USA. And worse still coincides with the time period when the EU replaces (almost free) Russian gas with the 4 and 5 times more expensive LNG than the US… But that’s not all. This temporal coincidence involves the fact that at the same time, almost all trade relations (exports) to Russia, which was one of the largest “customers” in the Eurozone after the US and China, are discontinued due to the 17 package of sanctions. This environment in the current circumstances can only deteriorate … The second strong cause of concern is that in existing conditions the rate of increase in the productivity of the Euro-economy has more or less raised… handbrake, with its three main economies almost simultaneously, move to the limits of stagnation or recession. Overall this (the slowdown in productivity growth) is the case with the economies of the seven richest countries (G-7) with the sole exception of the USA. There in the U.S. the rapid introduction of artificial intelligence (AI) and the implicit liberation over Biden of migration combined with huge state investments (Inflation Interpreting Program) has allowed a rapid increase in productivity, also assisted by low energy costs. Against this reality with which it “starts” in 2025 what does the eurozone do? And especially the ECB and the Commission? The ECB is timidly reducing interest rates and debt refinancing costs. But at the same time it withdraws, through the cessation of the APP and PEPP debt market programmes, the liquidity available on European markets by hundreds of billion euros per year. As far as the Commission is concerned, it obliges eurozone economies with the updated Stability Programme to drastically reduce public spending on investment and key public services (Health, Education, Infrastructure, etc.). In other words to the sick, already supported with “mountains” (Recovery Fund, SURE, APP, PEPP, TLTROS, etc.) for some years now, they have been choosing this time to reduce even further its drops …blood donation. Is it any wonder why the markets “remove” implicitly but firmly the euro?